That pension reform plan's election talk, Mr Johnson
Sunday 27 February 2005
Former prime minister Harold Wilson said that a week was a long time in politics, so imagine what eight years must represent. Plenty of time to hammer out, mould, polish and finely tune a government policy, you might think.
Yet what the Government has to show for the best part of a decade on state and private pensions is risible. Sure, politics is at best an imprecise science full of tacks, turns and U-turns, but the ruins of the pensions landscape lying in front of us take some beating.
Alan Johnson, the Secretary of State for Work and Pensions, treated us to a six-point plan of principles for pension reform last week. In no particular order, they are to tackle poverty; give everybody a chance to save; affordability; clarity; a fairer deal for women (discriminated against for staying at home to raise a family); and to plough ahead with a broad consensus.
The desperate need to reform women's pensions rights aside, this hot air is little more than common sense. Never mind the fact that there will be no movement on any long-term UK pension planning until Adair Turner reports back in October with his Pension Commission recommendations on how Britons can best afford to retire. Such mealy-mouthed government proposals can mean only one thing: did someone say "election"?
An actual date has yet to be fashioned out of the current round of electioneering, but the publication of the six-point plan was little less than a stunt to try to wrest back control of the pre-polling day agenda. The pressure for pre-eminence in the pension debate has begun to tell.
In the past 10 days, Conservative leader Michael Howard vowed to boost pension payouts to the elderly, end means-testing for state benefits, and change the rules that can force elderly people to sell their homes to pay for long-term residential care.
The Liberal Democrats plan to raise the state pension to the minimum income guarantee (currently £105.45 for a single pensioner) and link future rises to earnings.
To be fair, there wasn't much else that Mr Johnson could say. Bound by duty to wait until the outcome of the Turner Report, his hands are tied. And in any case, except for positive noises over notions of a "citizen's pension" that depends on residency rules rather than time in the work-place, the cupboards are bare.
Meanwhile, his department has been desperately trying to keep a lid on public dissent over compensation payouts to thousands of workers, whose company pension schemes have gone bust since 1997.
Last week, it moved to clear up some of the confusion by announcing that employees who were within three years of their scheme's pension age would receive 80 per cent of their core retirement benefits. The money will come out of the £400m pensions "lifeboat", launched last year to help the 65,000 workers affected.
However, a question mark still hangs over the financial fate of those younger workers who won't qualify for this deal - as well as over the size of the fund deemed by many to be too small. Set against the gravity of their plight, Mr Johnson's six-point pension principles plan looks like a flimsy nod towards a much brighter future.
This is a shame because he is as good a choice of Secretary of State for Work and Pensions as we have had. He has proved approachable, sympathetic to the particular problems of the long-term savings industry, and open to new ideas.
It is to be hoped that, after the general election (assuming Labour wins) and Mr Turner checks in, he will be given a free hand to make a proper fist of the UK pensions industry rather than devote his time to politicking. We live in hope.
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